Non-substitution Theorems

Abstract

A non-substitution theorem asserts that under certain specified conditions an economy will have one particular price structure for each admissible value of the profit rate, regardless of the pattern of final demand. The theorem has two forms. As first stated, it applies to an economy with single production and therefore no fixed capital (Arrow 1951; Koopmans 1951; Samuelson 1951; Levhari 1965). In its later formulation, some special joint products are considered to take account of fixed capital (Samuelson 1961; Mirrlees 1969; Stiglitz 1970).

Keywords

Joint production Non-substitution theorem Substitution

JEL Classifications

Bibliography

Arrow, K.J. 1951. Alternative proof of the substitution theorem for Leontief models in the general case. In Activity analysis of production and allocation, ed. T.C. Koopmans. New York: Wiley.Google Scholar

Koopmans, T.C. 1951. Alternative proof of the substitution theorem for Leontief models in the case of three industries. In Activity analysis of production and allocation, ed. T.C. Koopmans. New York: Wiley.Google Scholar